Welltower Sells 147 Nursing Facilities to Integra JV

Welltower is selling and transitioning 147 skilled nursing facilities currently operated by ProMedica to a newly formed partnership between Welltower and Integra Health, the companies announced this week.

Toledo, OH-based ProMedica will continue to operate 58 Arden Courts memory care communities in a joint venture with the Welltower REIT.

ProMedica, with its portfolio now skewed to memory care, has agreed to surrender its 15% interest in the SNF assets involved in their existing 85/15 joint venture with the REIT and will provide significant working capital to ensure a smooth transition of the skilled nursing facilities to new operators, Welltower’s statement said.

Terms of the transaction were not disclosed. The agreement does not include ProMedica’s non-Welltower leased senior care centers in Adrian and Monroe, MI, the skilled nursing and memory care facilities at the ProMedica Flower Hospital campus in Sylvania, OH, the statement noted.

In its recent Q3 earnings report, Welltower reported total portfolio YOY same store NOI growth of 7.2%, driven by growth in the REIT’s Senior Housing Operating (SHO) portfolio of 17.6%.

Welltower’s SHO portfolio’s YOY same store revenue increased about 11% in the third quarter, driven by 390 bps of YOY average occupancy growth and REVPOR growth of 5.3%.

“Same store REVPOR growth in the third quarter reached the highest level in our recorded history and is expected to accelerate further in the fourth quarter,” the REIT’s Q3 earnings statement said.

Welltower has been steadily expanding its senior housing portfolio in California this year. Last month, the Ohio-based REIT—formerly known as Health Care REIT—purchased Oakmont of Segovia, a 160-unit facility in Palm Desert, for $49.3M in a deal that pencils out to $308K per unit.

The Oakmont campus, encompassing 218K SF, was sold by Irvine-based Oakmont Senior Living. The campus opened in 2010 on an 8.6-acre site located at 39905 Via Scena in Palm Desert in the Coachella Valley.

In February, Welltower acquired two senior living communities in Sacramento that were part of six-asset, $297M sales by Windsor-based Oakmont Senior Living. Welltower reported $787M in acquisitions in Q1 2022 and 78% occupancy for its senior housing portfolio.

Approximately 78% of the senior housing units vacated during the pandemic have been reoccupied, according to a recent report from the National Investment Center.

Senior housing occupancy hit 81.4% in Q2 2022, up 3.4% from the pandemic low of 78% in Q2 2021.

“The sector has not fully recovered from occupancy losses during the height of the pandemic, but the continued upward occupancy trend despite workforce and supply challenges is a positive sign,” said Cuck Harry, NIC’s COO, in a statement.

On the supply side, inventory increased by a paltry 3,489 units due to construction slowdowns. The number of units under construction is the lowest since 2015, NIC reported.